Perspectives – May 15, 2025
We believe the tariff shock of Liberation Day (April 2) was front-loaded. Most of the damage to the equity markets seems to have been completed after about a week, with the S&P 500 hitting a low of 4835 on April 7. Since then, the S&P 500 has not only rallied into resistance near 5600-5700 (just below its 200-day moving average), but it has broken above those levels to a modest gain year to date.
Despite previous rhetoric from Washington and Beijing, recent talks in Geneva between the U.S. and China have gone well, and the worst of the tariff excesses are now on a 90-day hiatus. Both countries need to resolve their trade problems, and while China may be more reluctant to agree to changes, the former situation could
not continue indefinitely. We believe the pattern investors should anticipate is straightforward: good news on trade will likely drive market rallies. Given that much of the bad news appears to have been priced in already, any positive developments should provide a meaningful boost to equities, in our view. The current rally should
continue into the summer. It is possible that the equity market will close with a gain for this year, and our 12-month target is 6550 for the S&P 500, which would be a gain of over 15% from recent levels.
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